RSA-owned plant waiting for the rail cars to roll

WASHINGTON -- The taxpayers of Alabama helped build it and giddy politicians praised it as an 1,800-job economic jewel, but now a nearly idle 2.2 million-square-foot rail car plant in northwest Alabama is trying to avoid that dreaded label: boondoggle.

"We're all worried to death about it," said Sen. Jeff Sessions, R-Ala., who recently toured the mile-long facility along the Tennessee River in Colbert County.

National Alabama Corp., which started as a spinoff of a Canadian freight rail car manufacturer, was lured to the Shoals with $140 million in state and local incentives and a $350 million loan from the state pension fund.

The official announcement of the plant's arrival in July 2007 was filled with superlatives. Gov. Bob Riley called it a defining moment for the state. The CEO of the company -- who has since left -- promised benefits to the region, the state and the nation for years to come.

Instead, the economy tanked and railroads decided they could make do with their old cars for a while, leaving National Alabama Corp. with nothing to build.

Today, the plant is fully owned by the state pension system -- which pumped in another $275 million -- and has a skeleton crew of about 120 people building rail cars essentially for practice, waiting for one of two things to happen: either somebody orders a bunch of new rail cars, or somebody shows up who wants to build something else -- preferably something huge.

The economic developers who struck the deal are all feeling the pressure to make good on the promise of 1,800 high-paying jobs.

"All you'll have to do is stick your head out the door, you'll hear us hollering," on the day the hiring starts, said Forrest Wright, president of the Shoals Economic Development Authority.

The Retirement Systems of Alabama is in charge these days, having converted its $625 million loan to National Alabama Corp. into outright ownership in August. Chief executive David Bronner, whose investments include golf courses and airlines, is now in the rail business. He wants things moving by the end of the year.

"It's my number one project," Bronner said. "The public gets paid back by having the jobs. It's on my own shoulders and I want to get that bird off my shoulders."

There's a snazzy seven-minute video about the plant, advertising its gigantic space, accessibility and equipment. The video, which Bronner said RSA shot, explains that the plant "can be modified to meet almost any manufacturing need." Aerial pictures show huge empty parking lots and empty railroad tracks leading in and out.

Bronner said he is in talks with investors and a couple of global companies about possible deals, but he declined to name them. He said Friday evening that there has been progress in recent days, and a deal may be in the works.

He's also trying to secure intellectual property rights for the rail cars being built there.

"I'm optimistic, but I'm also realistic," Bronner said. "This isn't easy. It is a unique facility and it's got a lot of different things that can work in there besides rail. But I intend to stay in the rail business."

Taxpayer spending

As part of the incentives package that lured the company to Alabama, taxpayers already have anted up about $15.5 million for site preparation, construction and worker training. The deed for the 640 acres, worth $10 million, also was handed over. And much more money and benefits have been promised -- more than $110 million -- as employment levels are reached.

The contract with National Alabama Corp. says the incentives are for that company or an affiliate, so if the company partners with another and the employment goals are reached, the incentives would still be paid.

One part of the state's commitment is $53 million, which is a combination of $40 million in the original incentive offer plus $13 million tacked on when Congress failed to include Colbert County in the original Gulf Opportunity Zone. The zoning would have qualified the project for tax-exempt financing. The county eventually was added to the zone after a major push by the Alabama delegation in Washington, but it was too late for the company to use the special bonds.

To date, the state has paid $13.25 million to the company, according to the Alabama Department of Finance, a payment that was due 60 days after construction began. The rest of the state's commitment is due in installments that are based on employment levels at the plant. The next $13.25 million comes due, for example, within 30 days after the company certifies it has at least 900 full-time employees and has made capital investments of at least $250 million, according to the incentives contract.

Additionally, the state is supposed to pay $1 million a year for 20 years for improvements to the project site, but none of this money has been paid out yet, according to Alabama's acting state finance director Bill Newton.

Todd Stacy, a spokesman for the governor, said the state is not currently making incentive payments and Riley's administration is in talks with the company about "how best to move forward."

"This agreement was not substantially different from ones negotiated with other major economic development projects," Stacy said. "Has it turned out the way everyone envisioned it would? Obviously not. But when the agreement was reached and ground was broken on the facility, no one was forecasting that the country was about to go into the worst and longest recession we've seen in decades."

State and local

The Alabama Legislature, and voters statewide, approved a constitutional amendment in 2007 that increased the state's borrowing for industrial incentive packages by $400 million, and the rail car plant was one of the mega-projects on the line at the time.

The state's two-year college system also was part of the deal with National Alabama Corp. It was obligated to provide $15.5 million worth of worker recruitment and training. To date, Alabama Industrial Development Training has given about $300,000 worth of training to the company, said spokeswoman Jacqueline Allen. If the plant winds up being run by another company, she said AIDT would re-negotiate the worker training incentive deal.

Locally, the commitment to National Alabama Corp. went from $8 million to $25 million because of the Go Zone penalty. The contract says the money is to reimburse the company for costs associated with constructing and outfitting the facility and making improvements to the site. The local governments involved paid $2 million within 60 days of construction beginning, but the next payment of about $7.67 million isn't due until 900 workers are hired.

"We don't have to give them another dime until the jobs start coming," said Colbert County Commissioner Troy Woodis. "As long as we're not throwing money at it with no jobs, I think that's why the community has been so understanding about it."

Colbert and Lauderdale counties started collecting an additional half-cent sales tax in August 2007 in order to meet the local commitments. Woodis said that revenue is being banked and can be used for any economic development project in the two counties, not just National Alabama Corp.

Also, the contract lists 10 years worth of tax abatements for the plant, a benefit worth more than $13.6 million, according to the state. And the Shoals Economic Development Authority turned over to the company the deed to the land, a $10 million value.

Finally, Alabama's congressional delegation helped out with some federal tax money as well, benefits that were not included in the incentive contract.

In December 2007, U.S. Sen. Richard Shelby, R-Ala., announced that the Appalachian Regional Commission was giving $250,000 to the Colbert County Commission for the wastewater system at the industrial park where the plant is located. The total $2 million project also included $1.4 million from the Community Development Block Grant program through the U.S. Housing and Urban Development agency and $417,000 from the Colbert County Commission. In the announcement, Shelby mentioned the 1,800 new high-wage jobs that were expected.

"I think it's a long-term investment and I think it will hopefully fulfill its purpose," Shelby said in a recent interview. "It's a good thing. We're in a recession now, but when that was announced, we were booming and the economy was hot. Once the economy starts humming again, a year or two years, whatever, I think this plant will become a very viable situation."

Sessions, who called Bronner after his late summer plant tour, said he believed the state would see a return on its investment.

"On the question of whether or not the plant remains viable, I put my money on Dr. Bronner. It's not a slam dunk, but the people I met there who are operating the plant .¤.¤. are optimistic and very capable," Sessions said.

Former U.S. Rep. Bud Cramer, D-Huntsville, was a key player in the negotiations to bring the factory to the Shoals. At the time, he said landing it was, in his 18 years in Congress, "as good as it gets."

Cramer, now a lobbyist in Washington, said it was a huge project that the entire region took seriously.

"It hurts to see that one not yet quite what we thought it would be," Cramer said.